HARRISBURG — Pennsylvania's newly licensed slot-machine casinos sucked in billions of dollars in bets in 2007 — and spit out a jackpot of controversies.

MARC LEVY

HARRISBURG — Pennsylvania's newly licensed slot-machine casinos sucked in billions of dollars in bets in 2007 — and spit out a jackpot of controversies.

As four more slot-machine casinos opened around the state, a grand jury investigation into one casino owner sprouted in Harrisburg. In Philadelphia, showdowns erupted over the location of two prospective casinos. And a politically connected casino investor went to court to try to eliminate restrictions on the industry's political influence.

The year offered reason for optimism for those who say gambling revenues can eventually yield at least $1.5 billion a year for the state. At the same time, critics did not back down from their contention that casinos create a windfall of addiction, personal tragedy and ruined neighborhoods.

Friction among casino owners, regulators, activists and local officials forced the state Supreme Court to make decisions that helped shape the industry in Pennsylvania.

Chalk it up to the usual growing pains that follow legalization, say industry veterans and academics who study gambling.

"You create this billion-dollar industry overnight, you get all sorts of players coming in to fend for it and so it's not surprising that you're going to have some controversy along the way," said Bill Eadington, an economics professor who directs the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada-Reno.

The year ahead is likely to bring yet more strife. The flow of legal disputes shows no sign of letting up, perhaps the result of a poorly written law, observers say. And some expect that the casino industry will become more assertive in dealing with public officials.

Proponents of the 2004 law that legalized slot machines in Pennsylvania say the bottom line is that casino revenues are surpassing expectations.

This year, slots money injected more than $100 million into rent and property tax subsidies for low-income seniors. Next year, hundreds of millions of dollars is expected to be available to help homeowners who pay school property taxes and people who pay Philadelphia's wage tax.

"When we passed it, we said it was going to be the most far-reaching and important legislation we passed in the last 30 years — and it is," said state Sen. Vincent J. Fumo, the Philadelphia Democrat who shepherded the bill through the Senate.

Two casino licenses have been issued in Fumo's district — a contentious point to some residents, including one who is challenging the eight-term senator in the 2008 Democratic primary.

Gambling, said Fumo opponent Anne Dicker, is little more than a tax on gambling addicts and local businesses that lose sales.

On Friday, Pennsylvania's six slot-machine casinos crossed the $1 billion mark for gross revenue in 2007, over half of which goes to cut taxes and support the equine industry, volunteer firefighters, civic development projects and local governments.

That figure will rise with the 2008 opening of Hollywood Casino at Penn National, the state's sixth racetrack casino, and in 2009 with the potential opening of casinos in Philadelphia, Pittsburgh and Bethlehem.

Border states are taking notice.

In Delaware and Atlantic City, N.J., gambling revenues have declined in the face of Pennsylvania's competition. West Virginia legalized table games in an effort to protect its receipts. And legislators in Maryland approved a referendum next year on legalizing as many as five slots casinos after watching its horse breeders flee to Pennsylvania, whose racetracks boast purses swollen with slots money.

But not everything about Pennsylvania's new gambling industry is worthy of envy.

Philadelphia City Council sought to undo decisions by the Pennsylvania Gaming Control Board and has been sued by both casinos licensed to build there. And Dauphin County prosecutors began digging into state police allegations that businessman Louis A. DeNaples lied under oath to the gaming board to win a slots license.

The state Supreme Court refereed both matters, making it perhaps the most dominant force in Pennsylvania's slots industry in 2007. The court stopped a City Council-approved referendum in Philadelphia that would have scuttled plans by SugarHouse Casino and Foxwoods Casino Philadelphia to build on separate sites along the city's riverfront. It later ordered the city to issue building permits to SugarHouse — prompting Foxwoods to seek the same treatment. In between, the court rejected legal challenges to the gaming board's December 2006 licensing awards.

In October, DeNaples opened the state's first stand-alone casino, Mount Airy Casino Resort in Paradise Valley — just days after the court froze the Dauphin County investigation. After a two-month review, the court decided that Dauphin County's district attorney, Edward Marsico Jr., indeed has the authority to continue the DeNaples investigation.

A person familiar with the probe told The Associated Press that the grand jury is looking into whether DeNaples lied when he told the gaming board he has no ties to organized crime. The grand jury was scheduled to meet again Thursday. News of the investigation prompted a round of hearings in the Legislature over whether the gaming board needs state police help to conduct background investigations on potential casino owners.

The Morning Call of Allentown also revealed that DeNaples' application had included a character reference from then-U.S. Attorney Thomas A. Marino. The gaming board, citing confidentiality clauses, declined to say if other public officials likewise stumped for applicants.

The legal disputes show no sign of letting up in 2008.

The Supreme Court is being asked to decide yet another conflict involving the Philadelphia casinos, this time over use of submerged land along the Delaware River.